Buying houses

[wedge22]

Right guys my wife and i are currently on our second house in the property ladder after selling our first, a flat for a 80% increase in value in just 2 years. Of course that was just relative as we then purchased our current house at a value of £150,000. I have been thinking alot lately about buying another house using buy to let and perhaps remortgaging our current property to pay a deposit. Then i would keep that house rent it out and then when it increases in price remortgage and buy another. Basically i have been inspired by the Wilsons on the TV show I just watched. What I want to know is, do any of you rent out property?

[DR]

I have looked at it, and it is viable.

You need to buy cheap, and buy lots. You also need to do interest only mortgages. Is your house in your name or your wives?

[wedge22]

It is in both our names. I was definately going to use interest only and buy houses that are new builds from the plans as it is cheaper, and the house has usually increased in price by the time its built.

[Big RICHARD]

It is possible, but remember that you may be hit at a later date by new taxes as I think I read that the government were trying to discourage buy to let so that the housing market could be cooled a bit.

[DR]

It is in both our names. I was definately going to use interest only and buy houses that are new builds from the plans as it is cheaper, and the house has usually increased in price by the time its built.

You need to move the property in to one of your names then buy the new one in the others name - saves tax

Off the plan is the best way you can make 10,000 quid without even having to do any work

[wedge22]

Off the plan does seem to be an easy way to make money. Not sure if its possible to put the mortgage into one of our names I will have to speak to the bank.

[Saracen]

One thing to bear in mind is that with slowly increasing interest rates, it is far from inconceivable that the housing market is slowing and will settle, price-wise. It's also distinctly possible that prices will fall back and not beyond the bounds of possiblity that they will crash. If you buy relying on capital appreciation, and prices crash, you'll get clobbered twice.

This might be the wrong time to be thinking of doing this - you could end up buying at the high point of the market. Or not. It's a gamble.

[Angus]

One thing to bear in mind is that with slowly increasing interest rates, it is far from inconceivable that the housing market is slowing and will settle, price-wise. It's also distinctly possible that prices will fall back and not beyond the bounds of possiblity that they will crash. If you buy relying on capital appreciation, and prices crash, you'll get clobbered twice.

This might be the wrong time to be thinking of doing this - you could end up buying at the high point of the market. Or not. It's a gamble.

Eventually house prices will rise again.

I don't really think it's worth getting worried about negative equity etc AS LONG AS it's a long term investment.

If it's short term cash you're after I wouldn't go near the housing market at the moment.

[TeePee]

This report http://www.hbosplc.com/economy/inclu...icForecast.doc from the Halifax building society is worth a glance.

[DaBeeeenster]

I am renting my flat out at the moment, and making good money on it, but it is a big risk. You need to consider what is going to happen if the BoE slap another 50 or 75 basis points onto the base rates, both in terms of your two mortgages, but also on house prices and rental prices. If you look at a 20 year graph of house prices in the UK (I got one off bloomberg the other day - search around - there are some sites around that you could get that info from) you might be less inclined to take the plunge; it is quite clear that the market is over valued at the moment.

Finally, you need to speak to your bank, as buy to let mortgages are not as competitive as vanilla retail mortgages...

[Saracen]

Maybe, Angus, maybe. But the market is VERY high at the moment and it seems to me that there are serious structural problems with it - not least that getting on the ladder in the first place is very hard - not that it's ever been easy. Also, of course, the practice of some mortgage lenders to give 5 or 6 times income as a mortgage - that could be unsustainable if rates rise more than modestly.

Long term, of course, you're probably right. The market recovered (and some) after the last crash, but it took some years to do so.

[Rave]

I'm crossing my fingers it does crash TBH- otherwise my options are going to be to squat or to emigrate.

Rich :¬)

[Skii]

I'm crossing my fingers it does crash TBH- otherwise my options are going to be to squat or to emigrate.

Rich :¬)

Ditto.

[DR]

They wont let the market crash.... they cant afford to

[Iain]

David is right, if the market crashes then there will be masses of people in debt which means the economy will take a nose dive and the government doesn't want that. It's more likely that a slowdown or stagnation will occur for the next few years. Either way it would still mean that the capital value of a new house is not likely to rise by much in the near future e.g. 5 years or so

[Blub2k]

How can they maintain this ridiculously inflated and artificial situation without a crash happening, any of the economists out there know this? It happened before in the 80's why not again?